Contemporary Servs. Corp. v. Perales

• Decision Date: 25 June 2015
• Docket Number: 519039
• Citation: 2015 N.Y. Slip Op. 05529,13 N.Y.S.3d 263,129 A.D.3d 1397
• Parties: In the Matter of CONTEMPORARY SERVICES CORPORATION et al., Petitioners, v. Cesar A. PERALES, as Secretary of State, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

129 A.D.3d 1397
13 N.Y.S.3d 263
2015 N.Y. Slip Op. 05529

In the Matter of CONTEMPORARY SERVICES CORPORATION et al., Petitioners
v.
Cesar A. PERALES, as Secretary of State, et al., Respondents.

519039

Supreme Court, Appellate Division, Third Department, New York.

June 25, 2015.

13 N.Y.S.3d 264

Hinman Straub, P.C., Albany (James T. Potter of counsel), for petitioners.

Eric T. Schneiderman, Attorney General, Albany (Allyson B. Levine of counsel), for respondents.

Before: PETERS, P.J., LAHTINEN, McCARTHY and ROSE, JJ.

Opinion

LAHTINEN, J.

129 A.D.3d 1397

Proceeding pursuant to CPLR article 78 (transferred to this Court by order of the Supreme Court, entered in Albany County) to review a determination of respondent Secretary of State which imposed a civil penalty upon petitioner Contemporary Services Corporation.

Petitioner Contemporary Services Corporation (hereinafter CSC) is an event management company that provides various services at major sporting and entertainment venues throughout the United States as well as internationally. Its many services include, as relevant here, providing security guards. Respondent Department of State received a complaint that,

13 N.Y.S.3d 265

when CSC provided its services for the 2009 U.S. Open Tennis Tournament, it failed to comply with New York's Security Guard Act (see General Business Law art 7–A). As a result, the Department—through its Division of Licensing Services—conducted an investigation that resulted in allegations of hundreds of violations by CSC and its qualifying officer, petitioner Henry R. Zazzi. The violations regarding security guards included allegedly failing to comply with various categories of “due diligence” in determining qualifications of and reporting information about such individuals as required by statute and regulation (see General Business Law § 89–g ; 19 NYCRR 174.6 ). Following a hearing, an Administrative Law Judge sustained 287 of the alleged 535 violations and imposed a fine of $1,000 per offense for a total of $287,000. Respondent Secretary of State (hereinafter respondent) reduced the number of violations to 284 and, correspondingly, reduced the fine to $284,000. Petitioners commenced this CPLR article 78 proceeding challenging 219 of the violations—all of which pertain to security guards—and also contending that the penalty was an abuse of discretion as to all violations.

Petitioners argue that respondent's determination as to the disputed 219 violations was arbitrary and capricious, contrary to law and not supported by substantial evidence. More specifically, they assert that respondent used a definition of security guard that was inconsistent with the statutes and regulations. As a general matter, “an agency's interpretation of the statutes it administers must be...